Which of the Following Is NOT a Drawback of a Revenue-Sharing

question 49

Multiple Choice

Which of the following is NOT a drawback of a revenue-sharing contract?

• A)The supplier carries a greater burden of the risk.
• B)The supplier may not be motivated to expand its capacity for fear of ending up with excess capacity if demand remains weak.
• C)The supplier has the administrative burden of monitoring the manufacturer's sales and revenues to be sure the firm isn't underreporting them.
• D)The burden of overcapacity is borne by the buyer.

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Definitions:

Wage Rate

The amount of compensation paid per unit of time or piece of work for employed services.

Demand Curve for Labor

A graphical representation showing the relationship between the wage rate and the quantity of labor that employers are willing to hire.

Substitute Factor

An input or factor of production that can be used in place of another to produce a good or service.

Final Product

A good or service that is consumed by the end-user and does not require any further processing.